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MTrading Team • 2023-12-04

Gold whipsaws at record high as NFP week begins

Gold whipsaws at record high as NFP week begins

Markets consolidate the earlier moves on Monday as the European session begins, following a stellar move against the US Dollar. In doing so, the Greenback cheers the risk-negative headlines from China and the Middle East while bracing for Friday’s US employment report, especially amid the recent jump in the dovish Fed concerns.

With this, the USDCHF rallies the most and the AUDUSD occupies the second place due to their risk barometer status. It’s worth noting, however, that the sluggish yields and mixed bias for the Bank of Japan (BoJ) restrict the USDJPY pair’s moves while EURUSD and GBPUSD retreat from the multi-day high.

It’s worth noting that the Gold Price rose to an all-time high of around $2,150 before dropping back below $2,100. That said, the Crude Oil also drops amid energy demand woes and fears of mixed reaction to the OPEC+ supply cut agreement.

Elsewhere, BTCUSD and ETHUSD rose to the highest level since April and May 2022 respectively amid broad US Dollar weakness and optimism ahead of the fourth BTC halving event, as well as talks surrounding the spot ETF approvals.

Following are the latest moves of the key assets:

  • Brent oil drops to the two-week low, down 1.80% intraday near $78.30 by the press time.
  • Gold price retreats to $2,061 after refreshing the record high near $2,148, down 0.45% on a day at the latest.
  • USD Index picks up bids to reverse the previous day’s pullback to around 103.50 as we write.
  • Wall Street closed positive while Asia-Pacific stocks edged higher. Further, equities in Europe and the UK begin the day on a dicey floor.
  • BTCUSD and ETHUSD remain firmer at multi-month highs, around $41,400 and $2,250 by the press time.
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US Dollar licks its wounds amid Fed rate cut bias…

Dovish comments from Fed Chair Jerome Powell and the downbeat US PMIs drowned the US Dollar earlier. Further, an absence of recovery in the US Treasury bond yields also bolstered the market’s confidence in selling the US Dollar despite the geopolitical concerns in the Middle East and virus woes from China.

Fed’s Powell cited the ‘balanced’ risks around the rate as the FOMC is “moving forward carefully”. The Fed Boss also said that inflation is still well above target but moving in the right direction. His comments bolstered the bets for an early 2024 Fed rate cut while wiping out the odds of witnessing any more rate hikes.

Also, Chicago Fed President Austan Goolsbee said that the Inflation is coming down exactly as they (the Fed) want, which in turn bolstered the dovish bias about the US central bank’s future monetary policy. The policymaker also cited a 'meltdown' in China as the biggest risk to the US economy in the coming year. That said, the final reading of the US S&P Global Manufacturing PMI for November matched the 49.4 initial forecast but the ISM Manufacturing PMI reprinted 46.7 figure for the said month versus the market’s estimations of 47.9.

Additionally, the geopolitical concerns also directed traders toward the traditional haven, namely Gold, as well as allowed the US Dollar to lick its wounds. During the weekend, the US Navy confirmed that there were four attacks against three separate US commercial vessels in the Red Sea. Yemen's Houthi group took responsibility for drone and missile attacks while the US military responded afterward. Additionally, US Republican senators urged President Biden to restrict travel between the US and China after news of a severe pneumonia outbreak in the dragon nation. It’s worth noting that the Chinese health authority, namely the National Health Commission (NHC) held a press conference on Saturday and recommended reducing large gatherings in public places.

Additionally, the mixed prints of Canadian data and downbeat Oil prices propel the USDCAD prices as the nation’s Unemployment Rate for November rose to a fresh high since November 2022 while matching market forecasts of 5.8%, versus 5.7% prior, while the Net Change in Employment grew by 24.9K for the said month compared to 17.5K previous readings and 15K expected. Further, Canada’s S&P Global Manufacturing PMI eased to 47.7 from 48.6 prior.

Earlier in the day, Bank of Japan (BoJ) board member Asahi Noguchi highlighted the need for sustained wage increases to reach the inflation target. The same advocates prolonged the easy-money policy and put a floor under the USDJPY pair.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

Slow start of the key week…

While the US ISM Services PMI and the jobs report are highlights of the week, a two-week absence of the Fed policymakers’ comments ahead of the mid-December FOMC also challenges the market players on early Monday. It should be noted that the US Factory Orders and a speech from European Central Bank (ECB) President Christine Lagarde will entertain the intraday traders.

May the trading luck be with you!